Nevertheless his economics have profound implications for Socialists. Unlike Keynes, who saw the problem as one of effective demand during the crisis, Hayek saw the problem as one of loose monetary policy in the period before the crisis. Economics portal. Nearly a decade before the publication of The General Theory, Keynes observed that: The optimistic Zeitgeist of the nineteenth century has given way to a pessimistic Zeitgeist … We used to think that private ambition and compound interest would between them carry us on to paradise. To his credit, Keynes never fell into this trap. But those attitudes and conditions are what cause innovation to occur, when it does occur, in the private sector, and, as Mazzucato’s research indicates, there is no reason they cannot produce similar results in other contexts. Yet when I look into it, it is to me inexplicable that it can have this effect. Keynes had a notoriously restless intellect; he was an extreme case of Isaiah Berlin’s fox who knows many things.7 He whipped up more ideas before lunch than most of us have in a lifetime. He bend economic science into a socialist direction, without changing anything fundamental about the discipline. I am prepared to entertain an affirmative answer to the question “Was Keynes a socialist?” But the significance of Crotty’s book lies not so much in his affirmative conclusion as in the arguments that he marshals in support of it. with Steven Pressman. Lawrence Klein, an early champion of Keynesian economics and a future Nobel laureate, put it nicely: “Marx analyzed the reasons why the capitalist system did not and could not function properly, while Keynes analyzed the reasons why the capitalist system did not but could function properly. That is the controversial claim made in a new book by the distinguished radical economist James Crotty. Given all the projects I have taken on, it would not be worth my time or that of my readers. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. For Mongiovi and Crotty, Keynes was on the left. One reason I admired Harry Magdoff and Paul Sweezy, and all of the Monthly Review stalwarts I met or read about, like Istvan Meszaros, Annette Rubinstein, Dirk Struik, and many others (often they were from the Global South, like Samir Amin and Che Guevara), is that they were ALWAYS true to a radical vision and to radical values. He was critical of the sloppy application of orthodox ideas to complex real-world circumstances, but he was no renegade. James Crotty was at UMass-Amherst for many years. Is it possible that beneath the rah-rah attitude of the Democratic Party left toward a Green New Deal, there’s not much beyond the kind of formulas encapsulated in Mongiovi’s paragraph above? He also maintained that deliberate government action could foster full employment. He did not always take the trouble to reconcile the views he expressed in one context, while in a particular frame of mind, with the views he expressed in other contexts, while in a rather different mood. He cites Lawrence Klein, an early champion of Keynesian economics and a future Nobel laureate: “Marx analyzed the reasons why the capitalist system did not and could not function properly, while Keynes analyzed the reasons why the capitalist system did not but could function properly. Be that as it may, Crotty, without explicitly making the point, enables us to see that Keynes was an instinctive dialectician. All the while, organized labor was strong enough to ensure that workers shared in the benefits of growth. The evidence confirms Keynes was a non-Marxist socialist throughout his adult life.6 Although O’Donnell’s work on Keynes’s socialism is noteworthy, there are several problems with his account. The latest issue of Catalyst, a journal that is published by Bhaskar Sunkara and edited by Vivek Chibber, has an article by economics professor Gary Mongiovi titled “Was Keynes a Socialist?” It is a gushing review of “Keynes Against Capitalism: His Economic Case for Liberal Socialism”, a new book by James Crotty. During that so-called postwar Golden Age, unemployment was low, productivity growth and profitability were high, and real wages grew in step with productivity; business investment was robust, and the economy grew at a healthy clip. It would be a shame if Sunkara and Chibber continue traveling down this road but we can compensate for this by getting our shit together as we used to put it in the 1960s. The gap between the economy’s output and the level of spending on that output by households expands. All this salivating over government boards has little to do with the socialism I’ve defended since 1967. Crotty, a 79-year old economics professor emeritus, is a post-Keynesian just like Mongiovi. After all, you don’t want to go too far with the Marxism stuff in light of Keynes’s take, which is cited by Mongiovi: Keynes was highly antipathetic toward Marx. (Keynes glosses over the fact that those improvements in living standards were hard-won through disruptive activism by Chartists, trade unionists, and numerous social reformers.) Post was not sent - check your email addresses! Mongiovi attempts to answer that question in a section titled “Keynes as a Theorist of Structural Change”. As aggregate income increases, society tends to save a larger proportion of its income. Managed trade, rather than protectionism, would be a more effective strategy. Socialist Education Bulletin, Nº 1, July 1973. This paragraph is riddled with class-neutral terms. To be sure, Keynes was a uniquely eloquent advocate of a thoroughgoing progressive transformation of the economic landscape, and the most prominent and authoritative proponent of change on such an ambitious scale. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … In his special introduction to the German edition, Keynes recognized how “thirsty” the Germans must be for his “general theory,” which would also apply to “national socialism.”, (From “Bastard Keynesianism: The Evolution of Economic Thinking and Policymaking Since WWII”). I detect in this argument a trace of the dialectical method: the logic of the system generates tendencies that undermine its structural scaffolding. Cheap Motels and a Hotplate (Michael Yates), Ken McLeod: Early Days of a Better Nation. “[T]here is,” he noted, “an enormous field of private enterprise which no one but a lunatic would seek to nationalize.”30 He was not opposed to large-scale enterprises — he knew, as any competent economist does, that economies of scale confer benefits on society, and that large enterprises are here to stay; but they need to be intelligently controlled, managed, and regulated. IX, pp.295-306. Like many of us, he sometimes told people things that were closer to what he thought they wanted to hear than to what he really believed; and what he did believe could change from one day to the next according to the particular light in which he happened to be viewing a problem. Keynes was an English economist, who came to prominence for his writings on the turbulent inter-war period. This makes complete sense because capitalism is inherently monopolistic. I asked David once how he taught Marx’s labor theory of value. The collapse of the Bretton Woods agreement made exchange-rate uncertainty and balance-of-payments crises once again potent sources of economic instability. Keynes was aware of how market-driven structural change can disrupt a community’s social bonds. It is beyond the scope of this article to offer a critique of John Maynard Keynes or James Crotty’s new book. “The political problem of mankind,” he wrote, “is to combine three things: efficiency, social justice, and individual liberty.”35 Modern society is deficient in all three respects. He was actively opposed to socialism, Bolshevism, and the Russian Revolution, proudly declaring that, “the class war will find me on the side of the educated bourgeoisie.” June 5, 2019. And he is nowhere close to Kalecki in terms of radical insight. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. by michael roberts. Along with his colleague Sam Bowles, he is one of the few radical heterodox economists to gain tenure at a leading American university. Keynes is kind of a perfect example of this. The market is not built to do that. Indeed, Keynes viewed himself as a more radical socialist than MacDonald and Hugh Dalton, another 1917 Club member. And, just as important, Keynes wanted to transform how we think about the relationship between the state and the economic organization of society; he believed that polities have the power to make a better world for themselves by shaping the institutions that mediate and organize economic activity. According to that framework, capitalism passes through various institutionally distinct phases, roughly a quarter of a century long, in each of which capital accumulation is driven by a particular mechanism.16 In the earliest stage of capitalism, for example, profits and growth were driven by the expansion of commerce. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. Keynes’s biographers, Roy Harrod, Robert Skidelsky, and Donald Moggridge, position him as a liberal with progressive sensibilities; Skidelsky in particular is skittish about identifying him as a socialist.6. According to Keynes’ biographer, Robert Skidelsky, it would be “an interconnected elite of business managers, bankers, civil servants, economists and scientists, all trained at Oxford and Cambridge and imbued with a public service ethic, would come to run these organs of state, whether private or public, and make them hum to the same tune.”. The difficulty Keynes describes is the perceived lack of profitable investment opportunities; capitalist enterprise has the capacity to produce an enormous volume of output, but it cannot ensure the volume of demand required to realize the profit potential embedded in that productive capacity. Macroeconomic policy, Friedman argues, can reliably influence only the nominal. It is almost universally believed that Keynes wrote his magnum opus, The General Theory of Employment, Interest and Money,to save capitalism from the socialist, communist, and fascist forces that were rising up during the Great Depression era.This book argues that this was not the case with respect to socialism. We also find in Keynes’s argument faint echoes of an element of Karl Marx’s falling-rate-of-profit hypothesis. Against the criticism that placing investment spending under the control of the state will cripple an economy’s capacity to innovate, we may call attention to the groundbreaking work of Mariana Mazzucato, which shows that since the end of World War II, government has been a major source of innovation in numerous fields, and, indeed, that without the direct and indirect involvement of the state, many key innovations of the past half century — the internet, personal computers and the software they use, information technology and communications, solar and wind power, countless medical advances — would never have materialized or would have been delayed for decades.27 Keynes, as we have noted, had a great deal of confidence in the ability of technocrats to manage “the socialisation of investment,” but he says little about innovation, or about how it might be fostered through his proposed Board of National Investment. This question had already occupied continental scholars for some time and was the focus of lively discussion at the London School of Economics. If we want to rely on the private sector to do the job, investment will have to increase. The Keynesian Revolution, in Crotty’s interpretation, was considerably more revolutionary than we have been led to believe. But in recent years, politicians have used it even during the expansionary phase. Some might think that he was overly optimistic in supposing that the professionalism of the technocratic class, its commitment to public service, and a bureaucratic ethos that fosters creativity and experimentation would do the trick. These heroes of mine are so unlike the the DSA dreck in New York City today. I doubt that there is much to be gained by trying to pin a label like “liberal” or “socialist” onto Keynes — he was too exuberant a thinker to be put into a box. This makes complete sense because capitalism is inherently monopolistic. From the foregoing, one may see that Keynesianism has several points in common with Marxian socialism. According to the prevailing interpretation, Keynes, an enlightened but loyal member of the British establishment, foresaw that capitalism and the bourgeois values and institutions it underpinned would not be able to withstand another episode of economic turbulence on the scale of the Great Depression. Robert Skidelsky writes, “Keynes was a lifelong liberal” and “He was not a socialist” (2009, 135, 157; 1992, 233; 2000, 478).4 Contrary to Skidelsky, important Keynes scholars have aligned him with socialism.5For example, Rod O’Donnell writ… ... “Fascism entirely agrees with Mr. Maynard Keynes… First, O’Donnell (1999, 149) avoids defining capitalism or socialism, and this leads him to neglect Keynes’s policy views. While Keynes did believe that government interference in the economy was necessary, he did not believe that the government should own the means of production. We may detect, in all of this, tropes that have become part of the discourse on the crisis of capitalism. Socialism comprises those tendencies, forces, and institutions that blunt, mitigate or adapt market relations to social goals. Keynes’s outlook also anticipates elements of the Social Structures of Accumulation approach, a body of macroeconomic analysis grounded in Marxian theory. It cannot, ever. Keynes is one of the most important and influential economists who ever lived. Keynes’ deviate socialist circle was almost completely pro-bolshevik. That is to say, Keynes from the start understood capitalism to be a system that undergoes structural change over time and operates differently in different phases of its history. As the drive for mercantile profits ran up against limits imposed by the productive capabilities of sixteenth- and seventeenth-century economic conditions, tensions — or, in Marxian terminology, contradictions — arose that led to industrialization, with manufacturing now the main source of profits and driver of accumulation. Leave no doubt that Keynes was much more a socialist than the typical interpretation would lead on to believe. The greatest ideological triumph of neoliberalism was convincing the vast majority of ordinary people that the way capitalism worked in the United States in the postwar period is the way it normally works. It is reproduced in D. Moggridge, editor, 1972 Collected Writings of John Maynard Keynes, vol. In a 1939 interview in the New Statesman and Nation, Keynes described the economic order he envisioned as “liberal socialism, by which [he meant] a system where we can act as an organised community for common purposes and to promote social and economic justice, whilst respecting and protecting the individual — his freedom of choice, his faith, his mind and its expression, his enterprise and his property.”5 What Keynes had in mind, Crotty contends, was a gradual transition, through a process of trial and error, to a planned economy. Downloadable (with restrictions)! We have no clear idea laid up in our minds beforehand of exactly what we want. An essay of mine comparing James Crotty's newest book, Keynes Against Capitalism with Bhaskar Sunkara's The Socialist Manifesto and applying their lessons to the Democratic Primaries, especially the grappling between the farthest left contenders (Elizabeth Warren and Bernie Sanders), or, perhaps more accurately, their supporters, has just been published by Challenge. However, this simply isn’t so. Indeed, Michael Roberts pointedly refers to Crotty’s admission that “Keynes was unabashedly corporatist.”. Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life.” — John Maynard Keynes2, An engraving of St George slaying a dragon graces the cover of James Crotty’s monumental new book Keynes Against Capitalism.3 The dragon is meant to symbolize capitalism, and the dragon slayer represents the great twentieth-century economist John Maynard Keynes. And it was, moreover, the result of massive targeted infusions of demand into the global economy by the government of the United States. The decision of OPEC (the Organization of the Petroleum Exporting Countries) to raise oil prices triggered both a deep recession and an inflationary spiral; the extended episode of stagflation put mainstream Keynesianism on the defensive. Keynes was not himself an expert on economic planning. Social democrats seek to implement an economic strategy shaped by the thoughts of John Maynard Keynes. Socialist economics. The idea was that a mechanism needed to be put in place to provide a permanent stimulus to the economy. Many believe that John Maynard Keynes was a communist or a socialist. In some respects, this may have applied to Keynes, who was certainly aware of the tremendous economic miracle of Adolf Hitler in reducing unemployment from over 30 percent when he took office in 1933 to 1 percent by 1936, the year in which the German edition of the General Theory appeared. A few high points will serve to dramatize the depth and extent of Keynes Fabian immersion. Marxism portal. President Bush's deficit spending in 2006 and 2007 increased the debt. Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist … What of Keynesianism’s other, left, flank? by michael roberts. In an important new book Keynes Against Capitalism: His Economic Case for Liberal Socialism (Routledge, 2019) James Crotty argues that Keynes was a socialist who advocated a much more radical economic agenda than most mainstream economists and political analysts realize. The American Keynesian Alvin Hansen is usually credited with originating the idea in the late 1930s; former Clinton administration Treasury secretary Lawrence Summers has resuscitated it to explain the sluggish growth that has plagued the advanced capitalist economies since the financial crisis of 2007–2008.14 Summers’s argument is that the rate of interest that would generate enough private-sector investment demand to counterbalance saving at a full-employment level of GDP is, at the present historical juncture, negative. Along with his colleague Sam Bowles, he is one of the few radical heterodox economists to gain tenure at a leading American university. However, this simply isn’t so. ( Log Out / Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist of the type that does not believe in the family.”7 By contrast, Rod O’Donnell argues Keynes was a socialist. I know that it is historically important and I know that many people, not all of whom are idiots, find it a sort of Rock of Ages and containing inspiration. Without hesitation, he said, “as the truth”!. More recently, Northwestern University economist Robert J. Gordon has argued that the pace of innovation is slowing and that there are no transformative “Great Inventions” left to be discovered that might sustain robust employment for decades and substantially raise labor productivity, the two essential conditions for permanent across-the-board improvements in living standards.12 Keynes anticipated these arguments: “there seems at the moment a lull in new inventions,” he observed in 1931.13 He didn’t think the problem could be left alone for the market to rectify; for the market will not, as a matter of course, spontaneously generate a cluster of epoch-making innovations that will keep the economy running at a healthy clip for two or more generations. The material in this bulletin has been taken, with minor changes, from articles which originally appeared in the Socialist Standard during the past five years. O’Donnell makes his case in his provocative chapter ‘Keynes’s Socialism: Conception, Espousal, Strategy’ (1999). The most fundamental of those questions is: How should we configure our economy so that it will foster human flourishing and well-being? This approach seemed to work reasonably well for two or three decades after the end of World War II. Britain’s nineteenth-century economy drew its vigor from new inventions and their adaptation to profitable purposes, from population growth, and from the opening of global markets. It is not the ownership of the instruments of means of production which it is important for the State to assume. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”. Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist … John Maynard Keynes, 1st Baron Keynes CB ... and that such policies would lead toward socialism. This inter… See David M. Kotz, Terrence McDonough, and Michael Reich (eds). The failure of government-controlled capitalism _____ Introduction. Apparently, Crotty’s book is a corrective to this false characterization. Regulation of all kinds (but especially regulation of financial markets), minimum-wage laws, labor unions, the social safety net, Keynesian demand-management policies — all of these once-routine features of postwar capitalism have been the targets of sustained ideological attack. Sorry, your blog cannot share posts by email. Keynes’s writings are shot through with evidence of his engagement with capitalism as a dynamic, evolving system, one that had, by the early decades of the twentieth century, arrived at an existential crossroad. By resurrecting that vision, James Crotty has performed a valuable service. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. It is almost universally believed that Keynes wrote his magnum opus, The General Theory of Employment, Interest and Money,to save capitalism from the socialist, communist, and fascist forces that were rising up during the Great Depression era.This book argues that this was not the case with respect to socialism. Again in February 1918, Keynes admitted to “being a Bolshevik.”6 The famous journalist Clarence W. Barron, founder of Barron’s magazine, met Keynes in 1918 and recorded: “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist … In The General Theory, Keynes famously observed that investment decisions largely, depend on spontaneous optimism rather than on a mathematical expectation … Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits — of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities … Thus if the animal spirits are dimmed and the spontaneous optimism falters … enterprise will fade and die.25. If the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic reward of those who own them, it will have accomplished all that is necessary.23, But a program that proposes to regulate the level of investment on a large scale cannot help but also influence the direction of investment. Most socialist governments own the nation's energy, health care, and education services. Markets know best, hence anything that interferes with their operation is inimical to economic efficiency. He took it for granted that finding the right model would involve a good deal of experimentation. Higher levels of output can be sustained only if other sources of spending emerge to fill the gap, i.e., to absorb the economy’s higher level of savings. (Read parts one and two) Hayek, credit and the crisis. In other words, Keynes wanted to turn the wheel of history … Military Keynesianism kept industrial demand high, not only in the arms sector, but also in the subsidiary industries that supplied that sector with materials and parts. Keynes wanted to apologize and preserve, while Marx wanted to criticize and destroy.”4. Keynes seems blithely unaware that a problem of rational economic calculation might exist under socialism. Crotty concludes “Keynes was unabashedly corporatist.” Indeed – I would add that his concept of corporatism was not dissimilar to that actually being implemented in fascist Germany and Italy at the time. What’s entirely missing from Mongiovi’s review, and presumably in Crotty’s book, is any engagement with the class struggle. Keynes was no radical, and it is a stretch to claim he was. Social democrats seek to implement an economic strategy shaped by the thoughts of John Maynard Keynes. Keynes argued that investment, which responds to variations in the interest rate and to expectations about the future, is the dynamic factor determining the level of economic activity. The original typescript of the original speech contains a passage on the Labour Party which was omitted in the printed version. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. Only socialism can provide a positive way out of the present crisis. This is evident in his first important book, The Economic Consequences of the Peace (1919); there Keynes draws a striking contrast between British nineteenth-century capitalism, which witnessed astonishing improvements in living standards, largely through the adoption of transformative technologies such as steam power and rail transport, and the dispiriting mix of industrial distress and financial turbulence that marked the British economy in the aftermath of the Great War. MARX VERSUS KEYNES. In the postwar Social Structure of Accumulation, the process of capital accumulation was sustained by Keynesian demand-management policies, military Keynesianism, and an accommodation between business and organized labor to keep wages more or less in line with productivity growth. Higher education was a beneficiary of the Cold War, as the US government subsidized students, both undergraduates and graduate students, who specialized in sociology, anthropology, political science, and other disciplines that could be useful for the projection of imperial influence across the globe; federally supported cultural programs were meant to project soft power. He characterized Das Kapital as “an obsolete economic textbook which [is] not only scientifically erroneous but without interest or application for the modern world.” To George Bernard Shaw he wrote in 1934: “My feelings about Das Kapital are the same as my feelings about the Koran. This paper presents unexplored evidence that shows Keynes was a non-Marxist socialist from 1907 until his death in 1946. The exploitation of these opportunities involves what Schumpeter famously termed “creative destruction” — the wastage of obsolete resources, both human and inanimate, as the economy absorbs and diffuses the innovation and its offshoots. Keynes desired a return to the “good old days”, in which the capitalist class were “responsible” industrialists who invested for the good of their communities and society as a whole. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. v. t. e. Marxism and Keynesianism is a method of understanding and comparing the works of influential economists John Maynard Keynes and Karl Marx. According to this view, the most effective thing the state can do to promote economic well-being is to get out of the way of the great wealth-creating engine of private enterprise. Probably sent to the press before the pandemic kicked in, it smacks of the Fabian habits of the social democratic left and light-years away from our grim pandemic and economic free-fall realities. Fascism failed because their policies lead to war which destroyed the national economy they were … James Crotty is emeritus professor of economics at the University of Massachusetts Amherst. Keynes categorically rejected all general rules, but how does this relate to his political vision? Crotty devotes a good deal of attention to the idea that fundamental uncertainty about the future weakens the motive of private-sector managers to incur the risks associated with expanding their enterprises and with venturing into new spheres of activity. In stark contrast to concepts such as class consciousness, historical materialism and the dialectic, Keynesian economics is associated with the moderate strand of socialist thought. Keynes rejected socialism—he did not want government to own or even control industry, but rather he wanted the government to optimize the economy though its "fiscal policies," that is, taxes and spending. I am even more of a Keynesian now, after reading this wonderful book. Keynes was not a Socialist. Gary Mongiovi is a professor of economics at St John’s University in New York City, specializing in the economics of David Ricardo, Karl Marx, and Piero Sraffa. They often have to be pushed off the ladder with a rope around their necks. Based on a very close reading of Keynes’ work, Crotty argues that core Keynesian economic ideas should … Vol 3 He also believed that the most effective way to ensure a steady flow of socially useful investment sufficient to keep the economy operating at full employment is to assign authority over a good deal of investment spending to the state. Capitalism, according to Keynes, needed to be fixed, not abandoned — or so says the standard view of his project. Crotty marshals all of the available evidence and sets it out in an exceedingly clear way. But Keynes felt that the risk in Britain was remote. Instead, Keynes “Keynes was building a case to replace it [capitalism] with a form of democratic socialism in which most large-scale capital investment spending would be undertaken by the state or by quasi-public entities.” All this would unfold in a “gradual transition, through a process of trial and error, to a planned economy.” It did not merely entail a recognition that the state must actively manage the level of aggregate demand to keep the economy operating on an even keel: what is needed is direct public control of the economy’s capital expenditures. Change ), You are commenting using your Twitter account. The forces of the nineteenth century have run their course and are exhausted” [emphasis added]. An old URPEer, he was in grad school with a very good friend of mine, with whom I taught for a long time. ( Log Out / Keynes surely was not a classical liberal in the mold of David Hume, Adam Smith, or John Stuart Mill — but to make that point is a bit like taking a battering ram to a door that is already ajar. Crotty describes the proposed role of the board as “very ambitious indeed — to help recreate long-term boom conditions similar in vigor to those of the nineteenth century through public investment planning. Yes, Keynes did not favor socialism, but was worried that an extreme case of capitalism could actually lead to a socialist takeover. Ultimately, Keynes was trying to figure out a humane and fair way to achieve a flexible economic dynamism. But the Golden Age was an isolated episode. Keynes was not advocating half measures. James Crotty is emeritus professor of economics at the University of Massachusetts Amherst. Keynes: socialist, liberal or conservative? In the 1970s through the 1990s, wages stagnated, but debt-financed household consumption and asset inflation kept profits growing. It puts you in the same camp as the staff of the Jerome Levy Institute at Bard College, a school well-known for its housebroken faculty. A good capitalist wants to own all of the means of production so they can maximize profits. Society, Keynes believed, could and must take “intelligent control of its own affairs,” and this requires a reconfiguration of our economic institutions in the light of capitalism’s structural evolution since the nineteenth century.8 /a> Crotty lays out that vision in rich and comprehensive detail. Crotty demonstrates that Keynes was a secular stagnation theorist avant la lettre. That’s fine except that it has a tendency to result in a world of haves and have nots. Crotty describes at considerable length Keynes’s proposal to expand public control over investment. Like the rest of the Fabians, he saw socialism as a project to be carried out by a modern version of Plato’s philosopher-kings who would administer a mixed-economy state. While unfettered trade undoubtedly inflicts considerable harm on large numbers of workers, protectionism and economic insularity also have undesirable consequences that Crotty ought to have addressed. Many believe that John Maynard Keynes was a communist or a socialist. Keynes' work found popularity in developed liberal economies following the Great Depression and World War II, ... acted as a middle-way for many developed liberal capitalist economies to appease the working class in lieu of a socialist revolution. ( Log Out / TrackBack URI. But these sorts of labels are used to describe an ideology, something that can be extremely difficult to pin down. Why, if the government is run by the “good people,” it will function efficiently and in society’s best interests. Keynes was highly antipathetic toward Marx. He pushed for such a board again in the early 1930s when he served on the famous Macmillan Committee to formulate a response to the problems confronting the British economy. Note too Keynes’ elitism. His father was a Cambridge economist and he had Alfred Marshall tutor Keynes, who had not studied economics. He understood, sensibly, that muddling through is an unavoidable aspect of all human activity. John Maynard Keynes is widely regarded as one of the twentieth century’s outstanding liberals. To effect meaningful social change, we need to be open to every thoughtful perspective. Comment by Karl Friedrich — May 27, 2020 @ 6:43 pm. Crotty’s book suggests that turning this situation around must begin with the rediscovery of Keynes’s vision — his actual analytical vision, not the parody of it that has been handed down to us by the guardians of orthodoxy. Influenced by Paul Sweezey and a frequent contributor to MR, he argued that FDR’s Keynesianism and Nazi economics had something in common, namely strong state intervention, especially using a military build-up to offset the Great Depression: Some wag has defined an economist as someone who has seen something work in practice and then proceeds to make it work in theory. He liked to be provocative. As the working classes fought for and got higher wages, their rising consumption spending fueled further expansion. This definitely was not a short-term government stimulus program designed to ‘kick-start’ a temporarily sluggish economy and then let free enterprise take over.”22 One significant achievement of Crotty’s book is its demonstration beyond a doubt that Keynes’s overarching objective was to make a case for a program of national economic planning. “He was not mainly preoccupied with taming the business cycle: his ultimate objective was to bring about a radical transformation of our economic system.” So, what does such a radical transformation entail? In an important new book Keynes Against Capitalism: His Economic Case for Liberal Socialism (Routledge, 2019) James Crotty argues that Keynes was a socialist who advocated a much more radical economic agenda than most mainstream economists and political analysts realize. Far from wanting to rehabilitate capitalism, Keynes was building a case to replace it with a form of democratic socialism in which most large-scale capital investment spending would be undertaken by the state or by quasi-public entities. He is friendly with Bob Pollin, he of the typical social democratic views about a growth-oriented GND and how capitalism can decouple growth and energy use. In June 1930, at a meeting with those men, Keynes described himself as the “only socialist present.” 33 Beatrice Webb agreed and said, “ [Keynes is] certainly more advanced than MacDonald.” 34. Instead, I want to hone in on Mongiovi’s review as another indication of Sunkara and Chibber’s slow but inexorable retreat from Marxism. 'Crotty's view sharply diverges from mainstream perspectives which have long held that Keynes's overarching project was mild reform of capitalism. It powerfully captures two basic truths, which are at the core of his plan: (1) the United States urgently needs to embrace greater ambition on an epic scale to meet the scope of this challenge, and (2) our environment and our economy are completely and totally connected. Keynes was averse to class conflict: he was no class warrior; his aim was to diffuse class tensions. The acknowledgment is grudging, however: “the subsequent use to which [Marx] put this observation was highly illogical.”21 Keynes was never quite willing to give Marx his due on the matter of aggregate demand. He was a strong advocate of capital controls to prevent finance capital from fleeing a country in pursuit of higher returns when the monetary authorities push interest rates down. The Marshall Plan stimulated demand in Europe and Asia, with much of the assistance being used to purchase consumer goods and capital goods produced by US manufacturers. David Houston was treated like a pariah at the University of Pittsburgh, was spat upon for his opposition to the War in Vietnam (unlike any returning veterans! The central institution Keynes envisioned for this function was a Board of National Investment, an idea he first put forward in the late 1920s when he helped to draft a Liberal Party report on Britain’s Industrial Future. No, he wasn’t. The “contradictions” associated with the industrial phase, in particular the need to find new markets for goods produced by ever more productive methods, and the need to secure access to raw materials, led to the imperialist phase.17 Keynes, too, saw capitalism as a system that moves through various historical phases. This earned him much support from leftists throughout the world, especially from other opportunists who often call themselves socialist. The manufacturing sectors of Europe and North America now faced competition from industrializing low-wage countries; this led to heightened tensions between labor and capital, undermining the compromise that had kept wage increases in line with productivity growth. Yes, Keynes did not favor socialism, but was worried that an extreme case of capitalism could actually lead to a socialist takeover. He was a lifelong member of the British Liberal Party, which held few seats in Parliament after 1920. Was Keynes a socialist? Frankly, it matters little to me whether you want to call Keynes a liberal or a socialist. But Liberal Socialism, as Crotty sees it, may remain a little idealistic. This, of course, will sound familiar to anyone paying attention to political and economic affairs in the Western Hemisphere in 2020. Or even "socialist"? One misconception that Crotty convincingly obliterates is the idea that Keynes was mainly concerned with the short run, a view reflected in the mainstream depiction of his theory of effective demand as an account of, and remedy for, temporary deviations from long-run full-employment equilibrium. Whether the program that Keynes describes properly falls under the heading of socialism is a quibbling matter. “England is in a state of transition,” he wrote, “and her economic problems are serious. There was no need to expropriate capital or micromanage the allocation of resources. See John Maynard Keynes, “A Short View of Russia,” in, This aspect of Keynes’s theoretical framework was developed by Hyman Minsky in, Many of these outstanding German-speaking economists were forced to emigrate when Hitler came to power; they went on to form the backbone of the New School’s University in Exile. In the 1930s, the closest anything came to this ideal was the New Deal and Sweden’s social democracy, two of the Sandernista models. According to Paul Krugman, “Keynes was no socialist — he came to save capitalism, not to bury it.” When Keynes wrote The General Theory, there was literally mass unemployment, so … It's John Maynard Keynes. But once it is determined that market capitalism needs to be well managed, the questions of how and for whom it is to be … This is a function of examining who owns what. Crotty’s main contribution to economics has been to try and synthesise Marx and Keynes. As the economy’s capital stock increases, opportunities for profitable investment become scarcer, and profitability declines. By giving government a set of tools that could be used to make recessions shorter, less severe, and less frequent, mainstream Keynesianism effectively took socialism off the table. Why not figure out how to smash the fucking state that will continue to kill us, if it remains in the hands of the bourgeoisie? He did flirt with Fabianism a bit but he could never really commit to socialism. Keynes showed that if Capitalism is to be successful, it has to be managed: the “market”, if left to its own devices will breed great depressions and widespread impoverization. At the start of his review, Mongiovi recapitulates what most of us, including me, think of Keynes. Its dreary, out-of-date, academic controversialising seems so extraordinarily unsuitable as material for the purpose.”. Socialism has made a remarkable comeback in the political discourse of North America, the United Kingdom, and Western Europe. His writing could be messy and imprecise. While Keynes was always a friend to the working class, a staunch supporter of trade unions, he had little to say about the alienating conditions of the wage relation. They weren’t people to compromise. Keynes as a Theorist of Structural Change, Enterprise, Uncertainty, and the Socialization of Investment, John Maynard Keynes, “Liberalism and Labour,” in, John Maynard Keynes, “The End of Laissez-Faire,” in. Since the British Labour Party was an instrument of Fabian socialism the Keynesian theories formed the backbone of the Labour Party’s economic platform. Of course, it can sometimes be difficult to come to such a decision when the data itself is in transition, like Cuba in 1960 or Yugoslavia in Tito’s early years. Joseph Schumpeter argued that epoch-making innovations — steam power, the railroads, the internal combustion engine, electrical power — could spur long booms. There are few profound schools of economics and Keynesian School of Economics is one of them. The state would perform a limited set of economic functions: using fiscal and monetary policy to keep employment reasonably high; providing an adequate safety net for those who found themselves in dire straits because of circumstances beyond their control; regulating businesses to ensure that the pursuit of profit is not conducted by methods that put workers, consumers, or the natural environment at undue risk; and providing public goods like education, policing, and national security. Keep in mind that admiration for Stalin’s ruthlessness was widespread among the intellectual elite in the 1930s. I am far more interested in what positions he takes on a particular capitalist state itself. But many of his contemporaries were using orthodox neoclassical tools to make the case for economic planning.32 Other less radically minded colleagues understood that regulation and countercyclical fiscal and monetary policy were important tools for improving the operation of the market system.33 In Germany and Austria, an innovative group of progressive economists were advocating, and to some degree implementing, policies that had much in common with what Keynes was suggesting, policies that were motivated by similarly humane concerns.34. The real radical of the Keynesians at Cambridge was Joan Robinson. Opinion polls indicate rising dissatisfaction with capitalism and growing awareness of its many dysfunctions. Of course, this label does not necessarily mean that the point of view is unsound; but classification of anything is a step toward appraisal. Phase of the business cycle shaped by the labor movement and the crisis (! 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